Sampath Bank posts Rs 3 bn quarterly PBT

Sampath Bank recorded a Profit before tax (PBT) of Rs 3 billion for the quarter ending March 31, 2020.

Operating profit before all taxes, which is the real return generated by utilizing the assets and liabilities of the Bank, declined by 10.8%. This decline was due to the reasons mentioned above.

The challenges brought by COVID – 19 pandemic and the recession brought on by the terrorist attack in April 2019 has lead the period under review to be pressurized by some unique challenges that were not seen in Q1 2019.

The Bank reported Profit after tax (PAT) of Rs 2.5 billion for the three months ended 31st March 2020, reflecting a growth of 15.7% over the corresponding period in 2019. PAT growth was attributed to two factors; (1) the higher exchange income due to depreciation of the Sri Lankan rupee against the US dollar by Rs 7.90 during the quarter and (2) tax concessions received owing to the abolition of Debt Repayment Levy and NBT on financial services.

Meanwhile, the Sampath Group achieved a PBT of Rs 3.3 billion and a PAT of Rs 2.7 billion for the period under review compared to Rs 2.8 billion and Rs 2.1 billion reported in the corresponding period of 2019.

Owing to the prevailing challenges, average weighted prime lending rate in the Country dropped by approximately 3%. A similar drop was observed in Treasury Bill interest rates.

Consequently, Sampath Bank’s Net Interest Income (NII) decreased by Rs 0.2 billion to Rs 9.98 billion as at March 31, 2020, a decline of 2.4% compared to the figure reported in Q1 2019. It should however be noted that despite the challenging conditions, effective fund management strategies helped to restrict the decline in NII to 2.4%.

Overall, interest income for the period under review decreased by Rs 1.1 billion and stood at Rs 24.5 billion compared to Rs 25.6 billion recorded in the corresponding period in 2019, a decline of 4.3%. Interest expenses for the period under review decreased by 5.5%. For the three months ended March 31, 2020, Sampath Bank registered interest expenses of Rs 14.5 billion compared to Rs 15.4 billion recorded in 2019.

Net fee and commission income, which largely comprises credit, trade, card, and electronic channel related fees, was Rs 2.2 billion for the quarter under review, a marginal decline of 1.4% over the figure reported in Q1 2019.

Net other operating income recorded a YoY increase of 321.6% in Q1 2020, led mainly by an increase in realized exchange income due to a 4.4% depreciation of the Sri Lankan Rupee against the US Dollar.

Consequently, net other operating income increased to Rs 2.3 billion, from the loss of Rs 1 billion reported during the corresponding period in 2019.

On the other hand, the Bank incurred a net trading loss of Rs 664 Mn as a result of mark to the market losses on forward exchange contracts owing to the aforementioned currency depreciation.

The Bank’s total operating expenses, which amounted to Rs 5.14 Bn in 1Q 2019, increased marginally by 0.2% during the period under review to Rs 5.15 Bn in 1Q 2020. The increase in operating expenses was kept to a minimum, thanks to comprehensive cost containment strategies implemented throughout the period under review.

The total impairment charge for the first three months ended 31st March 2020 was Rs 4.9 Bn compared to Rs 3.5 Bn recorded in 1Q 2019 denoting an increase of 39.7%. The gross non-performing loans increased to 6.72% at end of 31st March 2020 from 6.37% reported at the end of 2019.

Sampath Bank’s total asset base grew by 2.2% (annualized 8.7%) during the period under review to reach Rs 983 Bn as at 31st March 2020. In comparison, the total asset position as at 31st December 2019 stood at Rs 962 Bn. Gross loans & advances grew by 3.4% (annualized 13.9%) to reach Rs 744 Bn as at 31st March 2020, recording a growth of Rs 24.8 Bn for the period under review. The total deposit base increased by Rs 31.1 Bn for the same period, to reach Rs 749 Bn as at the reporting date, a growth of 4.3% (annualized 17.4%).

The Bank’s Common Equity Tier (CET) I Capital, Tier I Capital and Total Capital Adequacy ratios as at 31st March 2020 stood at 13.65%, 13.65% and 17.16% respectively, all well above the corresponding minimum regulatory requirement.

Sampath Bank continued to demonstrate its commitment to offer the best possible service to its customers across the Country by maintaining all essential banking services without interruption amidst curfew restrictions imposed during the COVID-19 lockdown.